Posted on 25th September 2020 by Chris Makin

Expert Determination – What’s New?

As a chartered accountant (FCA) who practises exclusively in legal matters – forensic accountant, expert witness, mediator, expert determiner – my experience is that expert determination (ED) is considered by litigation lawyers too infrequently.

Of course, it is common practice for company sale/purchase contracts and the like to include a dispute resolution clause (DRC), but how often would a lawyer in a contentious matter consider anything between negotiation or mediation at one end of the spectrum and arbitration or a court hearing at the other?  Litigators have a duty to keep matters proportionate, and there is always the threat of a refusal to mediate, per Halsey, when costs are considered, but other options are available.

As an active mediator and expert determiner as well as my “day job” as forensic accountant, I have no axe to grind; I express these views merely to help you, the practitioner.

ED is versatile

Most of my ED appointments do arise from DRCs, but direct appointments can be effective, too.  Consider:

  • There was a dispute over how much should be paid to a retiring senior partner of a legal practice.  The partners appointed a senior arbitrator who made an award (for a hefty fee) but only on principles.  The quantum still had to be established.  So I was appointed determiner for that purpose.  But the whole process could have been done by me as expert determiner for little more than the second fee I charged.
  • I was appointed SJE where a partner in a firm of chartered accountants had left the firm, taking clients and staff.  I took oral representations from each, and got on so well with everyone that I suggested to instructing solicitors that I was confident I could mediate a settlement.  Both sides’ solicitors were interested, but nervous that they would have to start again if the mediation failed.  So instead, I was appointed expert determiner and quickly reached a binding judgment.
  • Two doctors were divorcing.  I was asked to mediate a settlement of their medical practice, and we settled the mediation but only on principles.  So I was appointed ED to put some binding figures on the settlement they had reached.

And the expert determiner is versatile

It is often thought that the expert appointed can decide matters only within his expertise.  That is wrong.  Lord Denning in Campbell -v- Edwards [1976] 1 Lloyds’ Rep 522 said that the expert appointed must make an entire decision, because that is what he contracted to do.  And in Bruce -v- Carpenter [2006] EWHC 3301(Ch), where an accountant told the court she could not make decisions because they were not of an accountancy nature, the court disagreed, and confirmed Lord Denning’s decision.

In my EDs I have often had to make decisions outside my expertise, after taking advice from other professionals.  The result is that the parties have a complete, legally binding, decision.

For accountants, what’s new?

There have been changes, effective 1 July 2020, in how an accountant expert determiner may be appointed.  The typical DRC in a company sale/purchase contract says that, if the two sides cannot agree the Completion Accounts or a determiner to settle them, the President of ICAEW must make an appointment, and I was one of about 100 FCAs on the President’s list.  But the President now declines to do so, except by court order.  Instead, applicants are directed to the ICAEW list of members online, where all members’ many specialisms are listed.

That doesn’t work well, because any English FCA/ACA (there are now 156,000 of us) can tick boxes of their specialisms, and no-one monitors their competence unless, as with any assignment, they get it wrong and are either sued or referred to disciplinary (or both).  I have come across cases where the appointee didn’t even know that Rules must be agreed, or the difference between a speaking and a non-speaking determination, or even between ED and arbitration.  This is worrying.

So how do you find a competent expert determiner?

The answer, I respectfully suggest, is to find your expert FCA by other means.  I am not alone in being competent to do this work, but you do need someone who knows what they are doing.

I have been doing EDs for over 20 years, I was in the first group of only 5 to be accredited at The Academy of Experts – the only professional body which awards this accolade – and I am an examiner there in ED for the full range of professionals. 

Other determiners, of course, are available, and my advice if you need an accountant to act as expert determiner is not to plough through the hundreds of ACAs on the ICAEW members’ list and perhaps end up with an accountant who hasn’t the first idea, but go to Expert Search at The Academy of Experts ,where you will find an expert who really knows how to do an expert determination.

Pen on top of a report on a desk Read more about Chris Makin